'American Idol' moves toward lower payouts for runners-up

View full sizeAssociated PressFinalists Phillip Phillips, left, and Jessica Sanchez appear onstage at the "American Idol" Finale in Los Angeles on May 23, 2012. "Idol" winner Phillip Phillips will receive the same $300,000 advance given to last year's winner Scotty McCreery upon completion of his first album, according to the contracts. Coming in second on "American Idol" as Sanchez has, may still be a path to super stardom, but it no longer offers guaranteed paychecks worthy of the next pop idol or rock star.

LOS ANGELES — Coming in second on "American Idol" may still be a path to super stardom, but it no longer offers guaranteed paychecks worthy of the next pop idol or rock star.

Wednesday night's runner-up, 16-year-old Jessica Sanchez, doesn't have a definite shot at producing an album and could be paid as little as $30,000 in advances for recording singles, according to the "Idol" contract she and other Season 11 contestants signed earlier this year.

The agreement appears to be the first time in "Idol's" history that producers are not offering the show's runner-up an album deal that in previous years came with a guaranteed advance of at least $175,000, an Associated Press review of the Fox show's contracts reveals.

The analysis covers eight of "Idol's" 11 seasons during which contracts filed for contestants under the age of 18 were available. The contracts were reviewed by judges in accordance with a California law that requires at least 15 percent of a minor entertainer's earnings be set aside for their benefit once they reach adulthood.

The reduced royalty advance covers the period immediately following the show. In addition to recording new music, the series' winners and finalists are obligated to perform in a concert tour and lend their likeness to a Walt Disney World Resort attraction in Florida.

If Sanchez is given an album deal following the show, she will receive the same $175,000 bonus that Lauren Alaina was paid after placing second in the show's 10th season. But 19 Recordings Inc., which has the option to handle the albums and recordings of Idol contestants for several years after they appear on the show, has replaced a guaranteed album deal for the runner-up with a staggered "Development Period" that requires less music and pays out less in advances.

Sanchez could be paid as little as $30,000 if she is asked to perform four single songs, or $60,000 if she records an "EP" of between four and 10 songs.

Representatives for 19 Recordings Inc. and "American Idol" producer FremantleMedia declined comment. They also have not disclosed which recording deal would be offered to Sanchez.

"It makes sense. You can't continue to offer the same sorts of rewards and incentives when the program was averaging 25 to 30 million (viewers), and (now) the finale is barely breaking 20 million," said Northwestern University assistant professor Max Dawson, who teaches a course on reality television. Wednesday's finale was the lowest-rated final show for "Idol" in its history.

"These contracts don't pay off," he said, contrasting the long list of "Idol" alumni who have been dropped by record labels with those who have thriving careers. "It seems like the successes that people like Kelly Clarkson and Carrie Underwood have had are the flukes."

He noted that the recording industry has shifted toward single song sales in recent years, and even established artists are struggling to sell full albums. "I wouldn't be surprised, quite frankly, if this is the direction they head with the winners," Dawson said.

Buyers purchased nearly 1.3 billion single songs last year as opposed to 331 million albums, said Dave Bakula, Nielsen's senior vice president of analytics for SoundScan. He noted that there have been some successful "Idol" runners-up, but producers appear to be giving themselves more flexibility with how they develop artists in different genres.

"Idol" winner Phillip Phillips will receive the same $300,000 advance given to last year's winner, Scotty McCreery, upon completion of his first album, according to the contracts. Finalists who placed third and lower could receive deals to record singles, EPs or full albums, with the lowest advance amounting to $24,000 if they complete their commitment to record up to four single songs.

Higher advances are paid if 19 Recordings agrees to produce more albums, with Phillips eligible to receive up to $800,000 for a six-album deal.

The advances are paid and later deducted from the singer's song royalties.

"As the music industry is changing, it makes sense for 'Idol' to change as well," Dawson said.

Despite the contract reductions, there are more opportunities for recent "Idol" contestants to earn money than their predecessors. Phillips will be paid $200,000 for his Disney attraction work and Sanchez will rake in $50,000 for her appearances. Both are also set to get a cut of merchandise profits.

No matter what recording deal Sanchez is offered, she already has heavyweight Hollywood representation. In March, a judge approved a deal in which she will be represented by Creative Artists Agency for future television, personal appearance and other employment deals.